Facebook, Inc. v. Amalgamated Bank (23-980)
argument 23-980Facebook, Inc. v. Amalgamated Bank
Supreme Court of the United States
1h 43m
8 speakers
8 chapters
transcribed 1 month ago
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What is the central argument about risk disclosures in the Facebook v. Amalgamated Bank case?
We will hear argument this morning in case twenty three nine eighty Facebook versus Amalgamated Bank. Mr Shan McGam?
Thank you, Mr. Chief Justice, and may it please the Court. The Ninth Circuit has adopted an outlying rule that threatens to create a sweeping regime of securities liability for omissions. The Ninth Circuit held that a risk disclosure can be misleading simply because a company does not disclose that the specified triggering event for the risk had occurred in the past. That holding was incorrect. A risk disclosure warns that a type of event may cause harm in the future. it usually makes no representation that the event had never previously occurred. The Ninth Circuit's approach would trigger serious concerns about over disclosure and fraud by hindsight. and this Court should reject it. Instead, the Court should adopt a similar approach to the one it took for statements of opinion in Omnicare.
There the court held that statements of opinion were ordinarily not actionable as false statements. But the Court recognized that a statement of opinion could be misleading, based on an embedded representation about how the Speaker formed the opinion. So to hear, depending on the content of the statement. A forward looking risk disclosure can be misleading based on an embedded premise about the current state of affairs. But just as a statement that the road may be flooded if it rains cannot be misleading simply because it rained yesterday, a typical risk disclosure cannot be misleading simply because the triggering event had occurred in the past. Under the correct approach, this case is an easy one.
Meta's warnings that business harm could result in the event of data misuse did not imply that Meta had never previously suffered such misuse. But in any event, the initial misuse of the data had been publicly reported by the time Meta made the statements at issue. and respondents have abandoned any claim based on the continued misuse of the data. And far from being virtually certain to cause a risk of harm to Meta's business, the initial misuse of the data did not result in any harm when it was publicly reported. Under any approach other than the Ninth Circuits, petitioners are entitled to prevail. The judgment of the Court of Appeal should be reversed. I welcome the Court's questions.
Um But the uh this is this case i isn't about harm at this stage, is it?
So the risk disclosure in this case, Justice Thomas, warned about harm, harm to Meta's business or reputation.
Uh but I thought the the district court only focused on falsity or misleading, uh whether or not this was false or misleading.
Oh that is correct. So this is not about injury to the plaintiffs or any of the other elements. This is about the element of falsity. Our point is simply that when you look at what this risk disclosure is warning about, it is warning about harm to business or reputation.
Well I but the problem is that the a reasonable person could look at the statement and assume that because it only uh talks about future prob probabilities of of this harm or this event occurring, that it never occurred. It's not s and there you also have another uh m one oh five statement in which you su uh do discuss past uh events. So why wouldn't one be able to uh read this and assume that it never happened.
Sure. So a couple of points in response to that, Justice Thomas. The first is that we don't think that a reasonable person would draw that inference from a statement of this variety. Where a statement says if something occurs, harm may follow from that. I don't think it's a necessary premise of that statement that the event has never occurred. And yet that is the implication of respondents and the government's position Subject only to the caveat that if the omitted information is immaterial, which is of course a separate element, it would not qualify. Now I do want to say one other thing in response to your question, which is that the context matters. This court has made clear, most recently in Omnicare, that when you apply the reasonable investor standard,
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Chapters
8 chapters
1
What is the central argument about risk disclosures in the Facebook v. Amalgamated Bank case?
0:00–13:51
2
How does counsel argue that forward‑looking risk statements should not be deemed misleading when past events have occurred?
13:51–26:22
3
What examples and hypotheticals do the Justices use to test the implied‑representation test?
26:22–39:36
4
How do the parties differentiate between materiality and falsity in securities‑fraud claims?
39:36–54:05
5
What is the Ninth Circuit’s ‘outlying rule’ and why does counsel seek to overturn it?
54:05–1:05:52
6
How might the SEC’s Item 105 and related disclosure rules affect the outcome of this case?
1:05:52–1:18:19
7
What are the potential consequences of adopting a categorical rule for risk‑factor disclosures?
1:18:19–1:31:30
8
What final relief does counsel request from the Supreme Court?
1:31:30–1:43:34